Correlation Between Vanguard Small and Vanguard Mid
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Vanguard Mid at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vanguard Small and Vanguard Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Vanguard Mid Cap Value, you can compare the effects of market volatilities on Vanguard Small and Vanguard Mid and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vanguard Small with a short position of Vanguard Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Vanguard Mid.
Diversification Opportunities for Vanguard Small and Vanguard Mid
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Vanguard Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap and Vanguard Small is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vanguard Small Cap Growth are associated (or correlated) with Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Vanguard Small i.e., Vanguard Small and Vanguard Mid go up and down completely randomly.
Pair Corralation between Vanguard Small and Vanguard Mid
Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to generate 1.58 times more return on investment than Vanguard Mid. However, Vanguard Small is 1.58 times more volatile than Vanguard Mid Cap Value. It trades about 0.11 of its potential returns per unit of risk. Vanguard Mid Cap Value is currently generating about 0.15 per unit of risk. If you would invest 21,481 in Vanguard Small Cap Growth on August 24, 2024 and sell it today you would earn a total of 7,780 from holding Vanguard Small Cap Growth or generate 36.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Vanguard Mid Cap Value
Performance |
| Timeline |
| Vanguard Small Cap |
| Vanguard Mid Cap |
Vanguard Small and Vanguard Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Vanguard Mid
The main advantage of trading using opposite Vanguard Small and Vanguard Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Vanguard Mid can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Mid will offset losses from the drop in Vanguard Mid's long position.| Vanguard Small vs. Vanguard Mid Cap Growth | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Growth Index |
| Vanguard Mid vs. Vanguard Small Cap Value | Vanguard Mid vs. Vanguard Mid Cap Growth | Vanguard Mid vs. Vanguard Value Index | Vanguard Mid vs. Vanguard Small Cap Growth |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |